Tuesday, March 24, 2009

Politicizing the economy

The Treasury secretary announced a new plan to nationalize more companies and to move such decisions from (relatively) non-political independent agencies to the White House, as the Washington Post reports:

The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.

The government at present has the authority to seize only banks.

Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president's Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.[Emph. added]

Companies that are "too large to fail" probably monopolies/oligopolies and should be dismembered via existing anti-trust laws. Obama prefers nationalization.

Geithner's policy also appears to send a clear message that, if they want to avoid nationalization, large companies better start contributing larger sums to Democrats.